Tax Planning Tips for 2009

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Advice to Improve Your Efficiency, Security, and Tax Returns

Income taxes, employee taxes. Sales taxes, value-added taxes. Appropriate credits and deductions, proper record keeping. It's enough to make your head spin.

Mistakes are costly. Each year, small and medium-sized businesses (SMBs) lose tens of thousands of dollars to fines and late filing fees, according to Sabrix, a provider of transaction tax management.

To minimize mistakes, here are four tax tips for finding, protecting, and reporting the data that your business needs to file its returns:

Put a Professional on Your Side

With the economy and tax laws changing almost as fast as the weather, it makes dollars and sense to have an expert on your side. Unfortunately, many small businesses learn this the hard way.

Christian Neeser, who employed 12 people in his company LABodyworx, thought he knew what he was doing when it came to filing his business taxes. Then he got audited.

"The savings I thought I was getting by doing it all myself were nothing compared to what I had to spend to get through that audit," he says. Neeser estimates that he lost a quarter of his annual earnings that year to legal and consultant fees and reduced revenues.

When a business has grown to more than three or four employees, or has more than $500,000 in revenues, it's time to hire a professional, says Vadim Birman, a CPA with Wallace & Associates. "Small businesses should be spending time growing their business, not trying to keep up with tax law."

Protect the Access to Your Data

"Tax information is sensitive information," says Lloyd Rochon, CEO of Internetworking Specialists, Inc. (INSI), a Cisco Premier Certified Partner. "Anywhere that information resides on your network has to be secure, to prevent unauthorized access and the liability that might come along with that."

Rochon recommends a range of network security strategies, including:

  • Set up, and then regularly update, network permissions so that only people who really need access to financial or employee data have it.
  • Purge former employees from your access list.
  • Establish a strong firewall to protect your data from external snoops.

Make Sure Data Is There When You Need It

Randy Rowe, president of RMS Associates, a Cisco Select Certified Partner, says he was called in to assess a customer's network only to discover that the backups the company thought were being done for more than a year weren't. "Needless to say, they lost a lot of critical data.

"As your business grows, so does the volume of your data. You need a storage solution that can accommodate that growth, and a seamless backup system to protect it," Rowe says.

A popular technology for storage and automated backup is a network-attached storage (NAS) solution. "Once you've reached data volume of 100 gigabits, you need a NAS," says Rochon.

He says NAS solutions are priced affordably, from about $800 to $1500, and their installation and management is fairly simple if you have an IT employee with a good understanding of networking. If you don't, professional installation may cost $500 to $1000, depending on the NAS's features and your network's complexity.

Instead of buying a NAS, you might consider using a managed services approach. "For about $500 to $1500 per month, you get the benefits of a fully managed NAS, fully automated backup, and network protection services," Rochon says.

Even in Tough Times, Invest to Save (And Get a Tax Advantage)

A capital investment that will improve efficiency and reduce ongoing expenses (such as upgrading your telephone system to a unified communications system) can be deducted in the tax year the investment is placed in service, says Birman.

"Under IRS Code Section 179, a business could deduct up to $250,000 in 2008, up from $175,000 in previous years," he says.

Although our four tax tips won't make filing your tax returns more fun, they can save your business money and make its tax preparations more efficient and secure.

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